This article reviews the piperidine derivative, donepezil hydrochloride (E2020, Aricept), a reversible central acetylcholinesterase inhibitor currently approved for treatment of mild-to-moderate Alzheimer's disease. Donepezil is well absorbed orally, unaffected by food or by time of administration; it reaches therapeutic levels in doses of 5-10 mg/day and peak plasma concentrations are obtained 3-4 h after oral administration. A single bedtime dose is recommended due to the long elimination half-life of the drug (70 h). Donepezil does not cause liver toxicity or significant drug interactions and is relatively well-tolerated. Initial side effects include nausea, vomiting, diarrhoea, insomnia, muscle cramps, fatigue, anorexia and syncope. Caution is advised in patients with bradycardia. Long-term use of donepezil in AD has been found to delay nursing-home placement and to result in caregiver respite. Donepezil also slows deterioration of cognition and global function in patients with moderate-to-severe AD, with improvement of abnormal behaviours. In addition to AD, donepezil demonstrates significant improvement in cognition, global function and activities of daily living in comparison with placebo-treated patients with vascular dementia and has potential therapeutic benefit for other neurological conditions.